Skin-In-The-Game 3.0. Gig-Economy Co. Airbnb, a “Unicorn” valued at $30bil, is petitioning the U.S. SEC to allow the home-sharing company to award equity shares in the private company’s shares to hosts. In an age where deregulation has become a buzzword across every industry, this multi-billion dollar, pre-IPO company has hit on an idea that might make sense, were it not for existing rules. Now lets see how securities regulators feel about it.
The underlying thesis for providing shares to hosts is designed to serve as a incentive for folks to generate revenue for themselves and (duh!) for the Unicorn-category private company whose private market valuation is estimated at north of $30bil. The notion is similar to what is common across the public company universe–awarding shares to employees in consideration for performance, duration of employment and other factors. There’s only one minor catch, Airbnb, much like other gig-economy concerns, is loathe to categorize their labor pool as employees, as it would trigger a domino effect in terms of employment rules of the road. For example, little things such as employment benefits, healthcare, social security contributions, along with a list of other entitlements typical to those who are employed by a company would, in theory, become an open target for Airbnb hosts.
To circumvent a daisy chain event that would put Airbnb home-sharing hosts into the column of employee, the company is seeking relief from the SEC. This is a BIG ask and a regulatory request that every gig-economy company will be keeping close eyes on.
Excerpt below from WSJ coverage..
Airbnb Inc. has asked the Securities and Exchange Commission to change its rules to potentially allow the online home-sharing platform to grant its hosts stock in the company while it is still private.
The San Francisco-based firm sent a letter to the SEC Friday after the regulator sought comments in mid-July about possibly overhauling rules to allow private “gig-economy” companies to offer equity to their so-called contractors, in the same way they do now to employees.
Such a change, if it were made, would give select Airbnb hosts a title coveted among investors: Airbnb shareholder. Access to invest in such Silicon Valley companies, sometimes called unicorns because of their billion-dollar valuations, has been limited as the firms continue to raise money in the private markets rather than going public. Airbnb was valued by investors at $31 billion as of a capital raise in March of 2017.
“We would like our most loyal hosts to be shareholders, but need these policies to change in order to make that happen,” Airbnb Chief Executive Brian Chesky said in a statement.
To read the entire WSJ story, click here